Mike Sherry – The Hale Center for Journalism

Established five decades ago, the Medicare program has a budget rivalling that of the Pentagon, and congressional budgeters project the roughly $600 billion price tag will double within the next decade.

But three Kansas City-area physician partnerships, serving both sides of the state line, are on the forefront of federal efforts to reduce the costs of Medicare, the federal program that provides health coverage to nearly one in five Americans. It covers the elderly and the disabled.

The primary care physicians have formed what the federal Centers for Medicare and Medicaid Services calls “accountable-care organizations,” partnerships that aim to trim Medicare costs through high-touch, coordinated care. The organizations focus on patients with chronic diseases, such as diabetes or heart disease, since more than two-thirds of Medicare beneficiaries suffer from more than one of these conditions.

CMS has approved approximately 360 ACOs through the Affordable Care Act, and two in the metropolitan area are part of a new crop that came on line this month. The other local organization is beginning its second year.

Taken together, the three local ACOs include more than 150 doctors serving nearly 32,000 Medicare beneficiaries. Missouri and Kansas combined have about 1.4 million Medicare beneficiaries, according to the Kaiser Family Foundation.

The premise behind accountable-care organizations is that spending time controlling chronic conditions pays off in the long run by avoiding expensive care, such as hospitalizations, that can arise when complications occur.

Accountable-care organizations get to keep half of the savings they achieve for the Medicare program based on benchmarks set by CMS.

Organizations and practices involved with the local accountable-care organizations include Encompass Medical Group, Kansas City Metropolitan Physician Association, and Jayhawk Primary Care, a subsidiary of the University of Kansas Hospital, and the Clay Platte Family Medicine Clinic in Kansas City, North.

Along with potential savings, executives with the three organizations said a key benefit of forming the partnerships is gaining experience for new payment models that are on the horizon.

Insurers, both public and private, are moving from procedure-based reimbursements toward “bundled payments” that offer a set amount based upon a condition.

For instance, inpatient and outpatient facilities might share a lump sum for an elderly patient treated for a broken hip. Under the current system, though, the hospital might bill Medicare for an MRI whereas the primary care physician would bill separately for lab work.

Health experts contend that system will produce better patient outcomes, and save money, by encouraging collaboration among separate providers – especially among hospitals and outpatient providers when a patient is discharged.

According to participants, taking part in an ACO prepares them for the bundled-payment system that is on the horizon.

“If you sit here and watch it go by, you are going to be sitting here watching it go by,” said Dayna Hodgden, chief executive officer of Encompass. “You are going to be left, right?”

Through the Medicare ACOs, the federal government enters into these shared-savings agreements for three years. Federal officials judge the organizations against nearly three dozen performance measures, including proper monitoring of hemoglobin levels among diabetics.

Officials intend for the accountable-care organizations to be seamless for patients [http://www.khi.org/news/2013/sep/13/medicare-expert-address-sunflower-fair-seniors-car/] beyond noticing more outreach from their doctors’ offices.

“We are just looking to strike the right balance between following evidence-based medicine and squeezing out any unnecessary expenses that are not relevant to a patients’ clinical status,” said Jill Watson, chief executive officer of KCMPA’s accountable-care organization.

It might take until the third quarter of this year, she said, to see how KCMPA has done against its benchmarks.

Three key focuses for her organization, she said, are getting patients in for wellness visits, ensuring successful hospital-to-home transitions, and reducing emergency room visits.

Watson said a priority this year would be strengthening coordination with patients exiting skilled nursing facilities.

Local ACO officials said physicians have long known that patient outreach and coordination of care with all a patient’s caregivers is the best way to practice medicine.

But, they said, the current fee-for-service model is a disincentive to such practices because tasks like calling patients might not qualify as a reimbursable cost.

The local executives said primary care practices might also not have the manpower needed to handle those tasks in addition to the day-to-day demands of seeing patients.

One difference today, said Carrie Jordan, chief operating officer Jayhawk Primary Care, is that tools like electronic medical records have made it easier to measure patient outcomes.

“This hasn’t been rocket science. These aren’t new ideas,” she said. “As things become more automated and more reportable, it just brings the reality of the situation to the forefront.”

Related Stories: Kansas City physicians take the accountable care approach from KCUR.

Major Funding for Health coverage on KCPT provided by Assurant Employee Benefits and the Health Care Foundation of Greater Kansas City.